THE UK’s largest dairy company has withheld payments to its farmers following a crash in the price of milk, its chairman said.
First Milk, a co-operative owned by British farmers, said 2014 was a “year of volatility that has never been seen before” in the global dairy industry.
Its chairman, Conservative MP Sir Jim Paice, said it will delay today’s payments to farmers by two weeks and all subsequent payments by a fortnight in order to build a “stronger business platform”.
But Meurig Raymond, head of the National Farmers’ Union, criticised the timing of the decision, stressing that dairy farmers are “already under huge financial pressure”.
He said some farmers are now receiving just 20p per litre for milk, the lowest price since 2007, as milk becomes cheaper than mineral water in some supermarkets.
In a statement for First Milk, Sir Jim said: “We understand that the milk payment deferral will cause concern for members as direct debits and payments will have been lined up against milk cheques.
“On that basis, we are working with all major banks at national, regional and local levels to explain the rationale around this decision. That way, bank managers should be well equipped for any conversations they have with First Milk members.
“We are a business owned by dairy farmers. The board are acutely aware of the difficulties this current extreme volatility is causing First Milk members and the UK dairy industry.
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“We don’t know how long this current market downturn will last, and we are aware that hundreds of UK dairy farmers are unlikely to find a home for their milk this spring.
“Our priority is to make the business and our processing assets as secure as possible in order that we can continue to process and market every litre of our members’ milk.”
The number of dairy farmers in England and Wales has halved in the decade since 2002, dropping to just under 10,000 for the first time.
A global increase in the production of milk at the same time as a drop in demand and rising farming costs means very few dairy farmers are making a profit.
Mr Raymond said he had heard from farmers who were “extremely anxious” about the latest decision.
“My priority is the impact of First Milk’s announcement on our members and I am working to ensure we are doing all we can across the NFU to support our members at this crucial time,” he said.
He added: “What we want is an economically sustainable dairy industry for the future. As farmers face volatile markets, I’m also convinced that the Government can do more to help by ensuring its policies are sympathetic to the current situation and will help farmers and farming businesses continue forwards.”
NFU dairy board chairman Rob Harrison said: “These latest figures don’t come as a surprise. Being a dairy farmer at the moment is like being a boxer - on the ropes and taking body blow after body blow. There’s only so much you can take before throwing in the towel.
“I, like my colleagues on the NFU dairy board, are completely appalled by the ongoing price cuts crippling our industry and we are working hard to support our members and their businesses in every way we can.”
David Handley, chairman of lobby group Farmers For Action, told the BBC Radio 4 Today programme: “We have got to try and turn this industry around. Dairy farming in the UK has gone through 10 years of turmoil and it’s got to change. We have all got to change.”
He added: “Most dairy farmers in this country have lowered costs to a point now that they can’t lower them any more. We have got a fantastic product, the consumer ... wants to buy it.
“Why are we allowing retailers to discount it, purely and simply - and evidence has come directly out of their mouths - to get people into their stores? That should not be happening to any industry, whether you are producing a radio, a litre of milk or a bottle of water.”
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